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Crockett Graphic Designs Inc. is considering two mutually exclusive projects. Both projects require an initial after - tax investment of $ 9 , 0 0
Crockett Graphic Designs Inc. is considering two mutually exclusive projects. Both projects require an initial aftertax investment of $ and are typical averagerisk projects for the firm. Project A has an expected life of years with aftertax cash inflows of $ and $ at the end of Years and respectively. Project B has an expected life of years with aftertax cash inflows of $ at the end of each of the next years. The firms WACC is
If the projects cannot be repeated, which project should be selected if Crockett uses NPV as its criterion for project selection?
Project A OR B should be selected.
Assume that the projects can be repeated and that there are no anticipated changes in the cash flows. Use the replacement chain analysis to determine the NPV of the project selected. Do not round intermediate calculations. Round your answer to the nearest cent.
Since Project A OR Bs extended NPV $ it should be selected over Project A OR B with an NPV $
Make the same assumptions as in part b Using the equivalent annual annuity EAA method, what is the EAA of the project selected?
Project A OR B should be selected.
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